CarsDiva’s Blog

An Auto Industry Insider’s View…From A Woman’s Perspective

Archive for November, 2010

That’s Amore… a little bit of Italiano in the U.S.

Posted by carsdiva on November 18, 2010

Chrysler has finally released its full list of 130 [potential] dealerships across the U.S. that will enthusiastically sell the Fiat brand.   They’ve all received letters of intent, but must first fulfill the requirements to secure their spots.

A small car to compete in the B-car segment, the Fiat 500, is currently being introduced to the U.S. at the Los Angeles Auto Show.  Although some dealers are expected to receive a few of the vehicles in December, none will be delivered to customers until January.  This will be a 2012 model of the vehicle, and the major launch is planned for March.

There are plans to add additional dealers to the already designated list, which will blanket the 119 markets, identified as areas with high growth potential for small cars over the next several years.

Fiat will join the Chrysler dealerships, but vehicles will be in an allocated area known as the “Fiat Studio,” accompanied by accessories, and more importantly, trained experts on the product.  The North American version of the vehicle will be manufactured in Chrysler’s Toluca, Mexico plant, with the initial model being a 2-door hatchback.  Plans for a convertible and an electric model are in the works, but don’t expect to surface until later in 2011.

AutoNation, Inc., (largest publicly traded auto group), will take the lead on dealerships sporting the new Fiat.  They’ve reported to have received seven letters of intent.  Meanwhile they announced that they feel well-positioned with this vehicle, particularly with the fluctuating gas prices.  Being able to offer a smaller, more fuel-efficient vehicle will be to their benefit.

As far as expected numbers for the first year?  Chrysler has hopes to sell 50,000 Fiats in 2011, and then to increase this number to approximately 78,000 by 2013.  The current model has been referred to as an “icon” in Italy…. but then again, so has the Ford Fiesta for that matter.  And actually on a greater scale, it’s the number one selling small vehicle (B-car) in Europe.  That being said, although this is a smart move for Chrysler, these dealers have their work cut out for them.

Like the Fiesta, the Fiat has been modified to adapt to U.S. safety and emissions standards.  Last sold in the U.S. in 1984….(Fiesta was last sold in 1980).  A bit of a follow-the-leader trend here?  Well, I’m just pointing out the facts that I’ve noticed– the actual numbers will do the telling…

And how about Alfa Romeo?  Well it could be another opportunity down the road for these dealers, but we won’t know until next year.  I can say one thing, Marchionne is definitely keeping them busy…

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Vicious Circle of Stolen Parts

Posted by carsdiva on November 15, 2010

A business model that revolves around theft? Not that unfamiliar when you look at the black markets that exist, albeit we’re specifically talking automotive here.  Police investigations have reported an increase of stolen in-dash, GPS navigation systems, especially over the last few months.  (And in case you didn’t know, GPS stands for Global Positioning Systems.)  Target vehicles include newer Cadillacs, Jeeps and Chrysler 300s, and the primary crime scenes- Michigan and Florida.

Re-purchased parts

In one particular situation [in Michigan] where a man’s in-dash navigation system was stolen, he ended up getting it back and re-installed, AFTER his insurance company paid the repair bill from the dealership.  You’re probably wondering what is she talking about???  Well, let me explain. What happened was the unit was stolen, after which the individual reported the incident to his insurance company.  The insurance company told him to go to his dealership and get the replacement.  Meanwhile, the thief got $200-$300 from the fence, who then sold it to an auto parts store for around $1,000.  The dealer then purchased the unit for $1,300 from the store and charged their customer, (in this case, the insurance company,) $1,875 + labor costs.

Total cost of the repair:  $4,700, including the $1,875 for the actual navigation unit.  When the man got his vehicle back and his CD ejected out of the stereo, he verified via the serial number that the unit was in fact, the original.

And the cycle of thievery…

Although it is ironic that this guy got the exact same unit back, the scenario as a whole is typical of what’s been happening.  The sequence is as follows:  Parts are stolen and the thieves make money; then the fences sell them online or to auto parts stores and also make money; dealerships purchase parts from the auto parts stores at a mark-up, and then the insurance is footed with a rather high bill to cover the cost of the unit and labor.  At the end of the day, the insurance pays out an exorbitant amount of unnecessary claims, which causes our rates to go up.  Between claims and repair costs, it’s estimated that somewhere over $3M has been paid out due to these thefts.

So as you can see, it’s all about simple economics here– the more parts stolen, the higher the demand for replacements…  and the vicious cycle continues.

You’ve got to admit, it is a pretty clever system that they’ve concocted.  That being said, the FBI has also gotten involved since many of the parts are being transported over state lines.  Between FL and MI, over 1,500 stolen units have already been recovered.

Now I don’t know about you, but I sure as hec don’t need to spend any more money on car insurance!  I feel enough ‘theft’ from my pocket that contributes to insurance companies…

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From Cars to Politics…

Posted by carsdiva on November 7, 2010

Well the auto industry IS political, no?  Did you know that four automotive dealers (current and former) were bidding to upheave Democratic incumbents in this past election?  Well they did, and three of the four were successful in doing so, following suit with the rest of the national sweep of the GOP across America.

The Republican [dealer] victory has doubled the number of dealers represented in the House of Representatives, not only signifying a record number of representation, but all of them from the GOP.  The candidates include Mike Kelly of Pennsylvania, James Renacci of Ohio, and Scott Rigel of Virginia, all of which by won by margins of at least 10 percentage points.

Well folks, I may have my own thoughts and opinions about this situation, but at the end of the day, let’s hope that they remember their roles and put the interests of their constituents before their own.

But now on to a more positive note, October signifies the “road to recovery” for the auto industry.  All major auto manufacturers showed a solid increase in sales, with the exception of Toyota, and have furthermore exceeded the auto analysts’ predictions.  New vehicle models are drawing in consumers, meanwhile confidence in the domestics has risen.

Despite the situation of turmoil and the struggle to reach this point, it looks as if there is light at the end of the tunnel.  The numbers are discernible and a more positive future is imminent.  I think that auto manufacturers can finally say, “yes we can”…

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